Volkswagen accelerates its electric car strategy in China

In 2020, under the dual pressure of economic contraction and the COVID pandemic, the total sales of China’s auto market fell to about 20 million vehicles, a year-on-year decrease of about 6%, which has led to fiercer competition for the market share of major auto groups. Even in such a general environment, Volkswagen Group (China) delivered 3.85 million vehicles throughout the year, with a market share of 19.3%, accounting for nearly one-fifth of the entire Chinese auto market, and a well-deserved sales hegemon.

SUV product expansion boosts overall growth rate

From the perspective of the Volkswagen brand, FAW-Volkswagen sold 1.28 million vehicles in the whole year; SAIC-Volkswagen sold 1.395 million vehicles, and the FAW-Volkswagen sub-brand Jetta also sold more than 155,000 vehicles in the year, according to Internet Info Agency.

In terms of specific market segments, sedan products are still an important pillar of Volkswagen in the Chinese market. Lavida, Bora and Sagitar still maintain their leading positions in the A-class sedan segment. with Lavida and Bora having delivered nearly 800,000 vehicles last year, nearly surpassing the volume of SUVs.

As for SUVs, a total of 805,500 SUVs were sold last year, accounting for 29.9% of the brand’s total sales, a year-on-year increase of 3.9%. New models such as Tanyue and Tuyue quickly became the leaders in the A-class SUV market. The car brand SUV models have increased from 3 models in early 2018 to the current 11 models.

In the future, Volkswagen will build the most attractive SUV family in China through the existing 10 SUVs. By the end of 2021, the Volkswagen brand SUV lineup will be expanded to at least 12 models. Obviously, the ever-enriching SUV product lineup is one of the main reasons for the steady increase in sales.

For VW China, SUV is also an extremely important growth point, and VW China’s current SUV offensive has begun to bear fruit. In 2020, Volkswagen launched 10 new SUV models, while maintaining a leading position in the SUV segment, with a 1.1% increase in market share and a 5.2% year-on-year increase in deliveries. In VW China’s product lineup in China, the proportion of SUV models has increased to 35.6%, and there are currently 40 models to choose from. A series of new models including Volkswagen’s new flagship models Touareg e-Hybrid, Tuyue, Viloran, and Tanyue, as well as Jetta SUV models VS7, Porsche Taycan and Audi Q2 and Q3 have achieved good market results.

Audi is still the most powerful growth point of the luxury car layout

Last year, VW China showed strong resilience in the luxury car segment. Among them, Audi’s domestically-produced models in China ranked first in the luxury car market. The deliveries of Audi, Porsche and Bentley brands all increased significantly year-on-year, with growth rates of 5.4%, 2.6% and 48.5% respectively.

As the Audi brand with the longest deployment in the high-end market by Volkswagen Group, it will catch up with the macro growth of the luxury car market in 2020 and continue to take the lead in China’s luxury car market.

In 2020, Audi delivered a total of 726,288 vehicles in the domestic market (including the Hong Kong market), of which the Audi A6L, Q5L, and A4L are still the three best-selling models. This is also the first time in history that Audi’s annual sales in China exceeded 700,000. By 2023, Audi plans to achieve annual sales of 1 million vehicles in China. Since Audi entered the Chinese market, it has achieved a cumulative sales of 6.6 million vehicles, and it is far ahead of Mercedes-Benz and BMW in the BBA camp, and has established itself in the Chinese luxury car market.

At the New Year Media Communication Conference in 2021, Audi China President Mr. An Shihao said that the future development of Audi will be based on three strategic pillars: including the management structure for business development in China and deepening of local partnerships And to bring consumers more attractive quality products and services.

Among them, Audi will be the focus of Volkswagen’s focus on expanding its product lineup this year. It is understood that Audi will increase its domestic models to 12 models by the end of 2021. Launched the largest Audi Sport model offensive in China’s history. By the end of 2022, Audi will provide Chinese consumers with nearly 20 Audi Sport models, covering all major market segments and models. In addition, the first domestically produced model on the PPE platform will be officially launched in 2024.

It is expected that by 2030, the annual sales of China’s high-end car market may exceed 4 million vehicles, and the market share of new energy vehicles will also continue to rise, accounting for about 40%. Audi’s accelerated layout in the field of electrification will not only be able to quickly occupy the high-end new energy market, but also provide consumers with a richer choice of products and drive the entire brand forward.

Brand downward strategy shows results

Electrification and digitalization will determine the future of the automobile. With the rapid transformation of the industry, the Volkswagen Group is also investing heavily in the entry-level market. The brand of entry-level models has also developed in the past year.

In the entry-level car market, the Jetta brand exceeded 155,000 vehicles last year. The excellent transcript shows that Volkswagen’s new sub-brand has begun to emerge. It has been established less than two years. In the case of the overall decline in the domestic auto market, Jetta can Such a record is a success. And car products are still an important pillar of Volkswagen in the Chinese market.

Since the young Jetta brand entered the Chinese market in 2019, it has shown great potential and is currently entering a period of sales growth. This year, VW China will further expand its product portfolio and further increase the visibility of the Jetta brand.

Another sub-brand, Skoda Pinshu, also delivered 173,000 vehicles to the Chinese market last year. In 2020, the SUV offensive was further strengthened, and its sales of SUV models accounted for a year-on-year increase of more than 10% in the brand’s total sales.

Whether it is Jetta or Skoda, the two brands play different roles in Volkswagen’s brand matrix and contribute to VW China.

In the entry-level market segment, thanks to the overall layout of Volkswagen group’s products, especially the young Jetta brand has shown great growth potential, using its strength to compete with independent brands to compete for third to fifth tier cities. In fact, consumers in this market account for more than half of the entire automobile market, and the Jetta brand is an important part of Volkswagen’s brand strategy.

Volkswagen accelerates its electrification strategy in China

The new energy vehicle market is the fastest growing market segment in 2020. Last year, Volkswagen Group’s brands launched more than 20 new models through traditional online and offline formats, of which 7 were electric models. At present, VW China’s new energy models have increased to 22. This enabled VW China’s new energy vehicle deliveries to increase by 45% year-on-year, and at the same time increased VW China’s share of the new energy vehicle market by 1.7%.

2020 is a year of Volkswagen’s electrification prospects. At present, VW China has launched an electrification product portfolio including Volkswagen ID. family models, Audi e-tron and Porsche Taycan, and VW China’s electrification matrix has a prototype.

Last year, the first pure electric SUV model ID.4 was launched in China, and two versions, ID.4 CROZZ and ID.4 X, were exclusively launched in China, officially opening the electrification of Volkswagen in China. According to Dr. Sihan Feng at the media conference, VW will continue to introduce three more ID models to China this year.

ID.4 has been produced at the Foshan and Anting MEB plants since October last year. It is equipped with a new APP 310 motor produced by Volkswagen’s Tianjin automatic transmission plant, and will soon be delivered to consumers.

It is estimated that by 2025, the delivery of new energy vehicles under VW China’s brands in China will reach 1 million. It is understood that Volkswagen’s Foshan plant and Anting plant have already begun to produce MEB platform models. By 2025, 15 MEB platform models under the Volkswagen Group’s brands will be locally produced. By then, electrified models will account for 35 percent of the Group’s portfolio in China. About 1.5 million new energy vehicles are expected to be delivered annually.

In addition to the MEB plant, in the next five years, the Volkswagen Group will also establish a joint venture with Audi and FAW New Energy to launch Audi PPE platform models.

According to the government’s recently announced plan, by 2025, new energy vehicles will account for 20% of the total automotive market share, and by 2035 the proportion will rise to 50%, of which pure electric vehicles will account for 95%.

At the same time, thanks to the further opening of the Chinese market, the Audi brand and FAW Group will jointly establish a joint venture headquartered in Changchun to build Audi’s pure electric models based on the Audi PPE electrification platform.

In addition, in the layout of charging and other infrastructure, VW also vigorously expands the charging infrastructure in China through the charging joint venture, CAMS New Energy Technology Co. CAMS has already laid out 40 Supercharging stations in Beijing, Chengdu and Shenzhen. Today, CAMS has a total of 255 charging stations, including 3,600 charging points. By the end of 2021, CAMS will cover 19 key cities across China. In addition, more than 2,100 dealers of the Volkswagen brand, Audi and Porsche have installed more than 8,000 charging stations.

Last year, Volkswagen Group ushered in the third “Volkswagen” in China. JAC Volkswagen officially changed its name to “Volkswagen (Anhui) Co., Ltd.” (referred to as “Volkswagen (Anhui)”). In 2023, Volkswagen (Anhui)’s first model will also come out.

The car super empire established by Volkswagen in China and the world will become more stable with the implementation of various electrification projects. After 2030, pure electric vehicles are expected to dominate the automotive industry in China and even the world. FAW-Volkswagen and SAIC Volkswagen are the cornerstones of Volkswagen Group’s strategy in China. Now, in addition to FAW-Volkswagen and SAIC Volkswagen, now Volkswagen (Anhui) has joined, which will further promote VW China’s electrification strategy.

Conclusion: “In the past five years, sales of only a few volume product brands have increased, and the Volkswagen brand is one of them,” said Feng Sihan. Globally, the Chinese auto market is indeed showing positive momentum, starting with being the first to overcome the COVID-19 pandemic and coming out of a short-term economic down cycle. Dr. Feng Sihan also predicts that the Chinese auto market this year will exceed the level of 2019.

Since its entry in 1984, Volkswagen has now been deeply involved in the Chinese market for 37 years, and its influence in the Chinese market even exceeds that of Germany, VW’s home market in Europe. VW wouldn’t be able to sit firmly in a world-class automotive head group without the huge contribution of the Chinese market. Obviously, the Volkswagen Group will continue to rely heavily on China in the future and create new products with a focus on the needs of Chinese consumers.

Source: Internet Info Agency

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